FAQ REAL ESTATE TAXES

Source: Dirección General de Impuestos Internos (DGII) (General Directorate of Internal Taxes) (Internal Revenue Service –IRS- in the United States).

Webpage:
http://www.dgii.gov.do/publicaciones/pregfrecuentes.html


Title: Frequently Asked Questions.


Tax on the Assets (Impuesto Sobre los Activos).

What is the Tax on the Assets?

It is an annually applicable tax on the goods in possession of the taxpayers, who could be Legal Persons (with operations or not) or Physical Persons with businesses of sole proprietorship and organized accounting.

What is burdened by this tax?

The total value of the assets, including in an explicit way the real estate, that appear in the taxable balance of the taxpayer, that is not fixed by inflation and after the deduction of depreciation, amortization and reserves implemented for uncollectible accounts.

Which Assets are included in the tax basis?


Cash in Cash Desk and Bank.
Accounts Receivable - Clients (minus authorized reserve).
Accounts Receivable - Administration Employees and Employees.
Accounts Receivable - Shareholders.
Inventories.
Merchandise in Transit.
Paid in advance expenses.
Buildings (net and not fixed by inflation).
Improvements in Renting (net).
Lands.
Automobiles and Equipment (net).
Other Net Fixed Assets.
Fixed Credit Investments.
Intangible Assets.


What Assets do not comprise the tax basis?


Investments in shares in other companies.
Lands located in the rural zone.
Real estate that by their nature are used for agricultural operations.
Advance taxes or advance payments.


Is there some exemption for the payment of the Tax on the Assets?

The Legal Persons who are free of the payment of this tax are those ones who, according to the implementation of the Código Tributario (Taxes Code), Special Laws or Contracts approved by the National Congress, are totally free of the payment of the Impuesto Sobre la Renta (ISR) (Income Tax in the United States).

Who can ask for a temporary exclusion?

Those companies whose acquired net fixed assets are higher than 50% of the total assets.
Those companies whose investments, that by the nature of their activity have a cycle of installation, production and beginning of their operations greater than one (1) year, so that determined assets are excluded from the tax basis of this tax.
Those taxpayers with losses by causes of greater or extraordinary force will be able to request for this year the temporary exemption of the Tax on the Assets.

What is the Rate to be paid?

The tax rate will be of one percent (1%) annually, calculated on the total amount of the taxable assets.


How is the payment of this tax determined?

It is determined with data of the General Balance Sheet that is enclosed with the Declaración Jurada (Sworn Financial Statement) of the ISR (Income Tax) that the taxpayer presents.
A form is filled up (back of IR-2) to make the calculation.


When is this tax paid?

The payment of this tax, if it applies, will take place in two quotas, beginning the first in the same date limit fixed for the payment of the ISR (Income Tax), and the second to the counted term of six (6) months from the expiration of the first quota.


In what case does the Tax on the Assets have to be paid?

In case that the amount of the Tax on the Assets is higher than the amount of the ISR (Income Tax), the taxpayer will pay the difference in favor of the tax collecting agency in the two anticipated quotas, divided in equal parts.

On the contrary, that is to say, if the ISR (Income Tax) were equal or higher, the obligation of the payment of the Tax on the Assets.will consider itself to be extinguished.


Can the taxpayer compensate Balances in Favor by effect of the excess in the payment of advance payments of the ISR (Income Tax)?

The taxpayer will be able to ask to the DGII (IRS in the United States) the compensation of this balance with the Tax on the Assets generated according to the previous point.


What implementation will happen with the payments of the Impuesto a la Propiedad Inmobiliaria (IPI) (Tax to the Real Estate Property) in relation to this tax?

For the taxpayers with the closing date of December 31st, the amount to be paid by concept of the IPI during year 2006 will take into account a credit against the Tax on the Assets corresponding to the tax period 2006, whose statements must be presented in the year 2007.


What does it happen if it is paid after the established date?

If it is paid after the deadline date, a surcharge of 10% for lateness in payment will be implemented to the value of the tax to be paid, by the first month or fraction of month; 4% of a progressive and indefinite surcharge by every month or fraction of subsequent month; and 2,58% cumulative compensatory interest by every month or fraction of month, on the amount to be paid of the late quota.

From January 1st, 2007, compensatory interest will increased to a 1,73%


Withholdings.

Is the payment of the Retenciones de Asalariados (Withholdings of Wage-Earners) due to be made on the same day that the payment of the Social Security?

No, the payments of Withholdings of Wage-Earners will continue to be carried out no later than the 10th day of every month.


To name of whom the checks for the payment of the withheld ISR (Income Tax) of the wage-earners must be emitted?

The checks for payments of the liquidation of Withholdings of Wage-Earners must be emitted to the name of: Colector de Impuestos Internos (Collector of Internal Taxes).


Must the checks for the payment of Withholdings of the Wage-Earners be certified although they are paid in the same banks where the taxpayers have accounts?

No, in case that the taxpayer who is going to make the payment has an account in the same bank he/she does not have to certify the check.


Which is the procedure to modify the wages of the employees through the Sistema Único de Información, Recaudo y Pago (SUIR) (Unique System of Information, Collection, and Payment) in order to liquidate the ISR (Income Tax)?

The taxpayers must access the SUIR system of the Tesorería de la Seguridad Social (TSS) (Treasury of the Social Security), in the webpage http://www.tss.gov.do, with his class and choose the link of Novedades (New Features) where they will be able to make the modifications that are required.

In which article of Law 11-92 is it mentioned that the employees who work in different companies must choose an employer as Agent of Withholding?

Article 73 of the Regulation of the ISR (Income Tax) states that the wage-earners that receive income of other employers must choose as his/her Agent of Withholding the company where he/she earns a greater wage, as his/her only Agent of Withholding, with prior authorization of the DGII.


Is it possible to update Novedades (New Features) of the payroll in the SUIR system via telephone through the DGII?

Yes, through the Centro de Atención Telefónica (Telephone Assistance Center) of the DGII (809-689-3444 and 1-809-200-6060 from the interior of the country without charges –toll free-) the taxpayers will be able to update Novedades (New Features).


Which is the procedure for the taxpayers to make the payment of the ISR (Income Tax) according to the system of the TSS?

The taxpayers must go to the affiliated commercial banks (Bancos Popular, Bancos León, Bancos BHD, and Bancos de Reservas –Reserves Banks-) with the payment voucher, emitted through the webpage of the Tesorería de la Seguridad Social (Treasury of the Social Security) (www.dgii.gov.do).


How will the taxpayers receive the liquidation and payment voucher of the Withholdings of Wage-Earners?

The taxpayers will receive the voucher for the payment of their liquidation through the TSS; it can be printed from the webpage of the TSS or in the affiliated banks.


What document must present the taxpayers in the banks for the payment of the Withholdings of the Wage-Earners?

The taxpayers can pay their Withholdings presenting the liquidation of the ISR (Income Tax) payment, with the reference number or the voucher of payment that is generated through the SUIR system of the TSS.

What is the procedure for implementing the ISR (Income Tax) to the employment bonuses that receive the wage-earners with the new method of sending them through SUIR?

The representatives must access the SUIR system through the webpage of the TSS (www.tss.gov.do), choose the option Novedades, Cambio de Salario y Otros (New Features, Change of Wages and Others), insert the number of the Cédula de Identidad y Electoral (Electoral and Identification Card) of the employee who will receive the employment bonus in the company, click on Buscar (Search), confirm the data of the employee, insert the value of the employment bonus in the corresponding space, then click on the options of Insertar (Fill Up) and Aplicar (Implement) Novedades (New Features).


Through which disposition can the taxpayers obtain more information about the agreement between the TSS and the DGII?

The taxpayers can obtain all the information about the agreement between the Tesorería de la Seguridad Social (Treasury of the Social Security) and the Dirección General de Impuestos Internos (DGII) (General Directorate of Internal Taxes) through Norm 10-04.

Note: Norm 10-04 is published in the section of General Norms of our webpage (http://www.dgii.gov.do/legislacion/normas2004.html).


What is the procedure for taxpayers to send the payroll’s data through the Sistema Único de Información, Recaudo y Pago (SUIR) (Unique System of Information, Collection, and Payment) that the TSS operates?

The taxpayers must be enrolled in the Tesorería de la Seguridad Social (Treasury of the Social Security) and to update the payroll’s data of their companies.


Can the taxpayers register in the TSS through the DGII?

At the moment, only the Tesorería de la Seguridad Social (Treasury of the Social Security) is registering in the Sistema Único de Información, Recaudo y Pago (SUIR) (Unique System of Information, Collection, and Payment).


How must be placed the wages in the space Salario Cotizable (Quotable Wages) for the ISR (Income Tax) of the SUIR system with or without the Social Security implemented?

In the space Salario Cotizable (Quotable Wages) of the ISR (Income Tax) the wages that the employee earns without having deducted the Social Security to him/her must be placed.


What is the procedure for sending Otras Retenciones IR-17 (Other Withholdings IR-17) through SUIR?

The representatives must access SUIR through the webpage of the TSS, in option DGII, choose IR-17, fill up the form, confirm the data that have been inserted, and then click in the option Declarar (To Make the Statement).


Through what link can be accessed the form IR-17 of Otras Retenciones (Other Withholdings) in the SUIR Plus?



The taxpayers must access the webpage of the TSS through the link http://www.tss2.gov.do/Login.aspx?log=r, insert the RNC (National Registry of Taxpayers number), ID number and password, and log in the system, and then choose DGII and click on Declaración IR-17 (Statement IR-17) (Form IR-17).


What is the procedure to follow in order to make a correction of form IR-17 through SUIR Plus?

In order to modify the data filled up in form IR-17, the interested user must access SUIR Plus through the webpage of the TSS before the 10th day of every month, and in option DGII, choose IR-17, fill up the form, confirm again the data that have been filled up, and then click on the option “Actualizar Declaración” (“Update Statement”).


What withholding must the companies implement as an item of income when the owners are physical persons?

The withholding that the companies must implement to the physical person as an item of income is 10% according to Law 288-04.


Impuesto a la Propiedad Inmobiliaria (IPI) (Tax to the Real Estate Property) / Impuesto sobre las Viviendas Suntuarias y los Solares Urbanos no Edificados (IVSS) (Tax on the Sumptuary Houses and the Non-Built Urban Lots).



What are the Taxes that are due to be paid for real estate transfers?

The Taxes that are due to be paid for real estate transfers are the following ones:


3% of the value of the real estate property.
Law 80-99 (Impuestos sobre Documentos) (Taxes on Documents) on the value of the real estate property.


What are the requirements for declaring real estate property in the IPI and where must they be presented?


The interested party will have to go to the Administration or a Local Agency that corresponds to him/her with the following documents:

Communication informing the exact address of the real estate property and the owner;
Copy of the Title of Property, Letter of Certainty from the Registrar of Titles, Sentence of the Tribunal Superior de Tierras (Superior Court of Lands) or Act of Sale of the real estate property;

Copy of the Mensura Catastral (Cadastral Measure) (if it exists);.
Copy of the draft of the Improvement built in the lot; and
Copy of the Cédula de Identidad y Electoral (Electoral and Identification Card) in the case of Physical Persons; Tarjeta Tributaria de Identificación (Taxes Identification Card), in the case of Companies; and Passport in the case of Foreigners or Dominicans living abroad who do not have Cédula de Identidad y Electoral (Electoral and Identification Card).


What is the rate to be paid for the IPI?

One percent (1%) on the excess of the amount of five million pesos, which are exempted.


Will the commercial lots and premises be taxed with a 1% of the excess of the amount of RD$5.000.000,00 with the Reforma Fiscal (Tax Reform) (Law 288-04)?

Yes, according to Law 288-04 the non-built lots and those ones where in their lands there is a building are burdened with this tax; the real estate property destined for housing and commercial premises, when they exceed the amount of RD$5,000,000.00 (five million pesos). The commercial premises are excluded, because they are taxed by the Impuesto Sobre Activos (Tax on the Assets). (Translator’s note: There is a contradiction here with the information given by the DGII regarding the commercial premises. It is pertinent that the reader consult by himself/herself this information directly with the DGII.)

What is taxed by the IPI/IVSS?

Houses and commercial establishments in urban or rural zones, and non-built urban lots, which are the property of Physical Persons or Companies of Sole Proprietorship without organized accounting.


What is exempted from the IPI/IVSS?


Houses whose value is lower than the amount of five million pesos (RD$5,000,000.00).

Houses whose owners are sixty and five (65) years old, in the case that this house has not been transferred to another owner in the last fifteen (15) years, and the owner has only this house as his/her real estate property.

The buildings and lots in the name of the Dominican State, Charitable Institutions, Religious Organizations and Diplomatic Delegations.

Who must pay the IPI/IVSS?

The owners of houses and lots whose value exceeds the amount of five million pesos (RD$5,000,000.00).

When is it due to be presented and paid for?

It must be presented annually in the Declaración Jurada (Sworn Financial Statement) within the first sixty (60) days of the year, and it must be paid in two (2) semester quotas, the first on March 11th, and the second on September 11th.



Motor Vehicles.

What are the requirements to make sales transfer of motor vehicles and how much must I pay?

The interested party will have to deposit in the Oficinas de Servicios Personalizados de Vehículos de Motor (Motor Vehicles Offices of Personalized Services) the following documents:

Copy of the Cédula de Identidad y Electoral (Electoral and Identification Card), or Passport (in case of foreigners) of both the seller and the buyer of the vehicle.

Original Matrícula (Motor Vehicle Certificate), properly endorsed.

Notarized and legalized Act of Sale.

Certification of Plan Piloto (Translator’s note: Plan Piloto is a Police Department office in Santo Domingo).

Payment of the Sales Transfer Tax of 2% of the value of the vehicle (according to the rates table).

Receipt of payment of RD $100,00 for printing of the Matrícula (Motor Vehicle Certificate).

Receipt of payment for service of RD $300.00.

Receipt of payment required by Law 80-99 out of the value of the vehicle (according to rates table).


What are the requirements to request license plates duplicates and what is the rate to be paid?

The interested party will have to deposit in the Oficinas de Servicios Personalizados de Vehículos de Motor (Motor Vehicles Offices of Personalized Services) a communication requesting the elaboration of a new License Plate, annexing:

Copy of the Cédula de Identidad y Electoral (Electoral and Identification Card), or Passport (in case of foreigners) of the vehicle’s owner.

Certification of Complaint to the Policía Nacional (National Police).

Publication of loss of License Plate in a newspaper of national circulation, certified by 3 consecutive days.

Collection of services for RD$300.00.

Original Matrícula (Motor Vehicle Certificate).

Receipt of payment (License Plate emission) of RD$2,500.00 for automobiles and RD$200.00 for motorcycles.

Receipt of payment of the RP-01 (printing of Matrícula –Motor Vechicle Certificate-) for RD$100.00.


What are the requirements for requesting duplicates of Matrículas (Motor Vehicle Certificates) and what is the rate to be paid?

The interested party will have to deposit in the Oficinas de Servicios Personalizados de Vehículos de Motor (Motor Vehicles Offices of Personalized Services) the following documents:

Copy of the Cédula de Identidad y Electoral (Electoral and Identification Card), or Passport (in case of foreigners) of the vehicle’s owner.

Copy of the Tarjeta de Identificación Tributaria (Taxes Identification Card) in the case of Companies.

Publication of loss of Matrícula (Motor Vehicle Certificate) in a newspaper of national circulation (certified by the newspaper).

Certification of Complaint to the Policía Nacional (National Police).

Receipt of payment for RP-01 (printing of Matrícula –Motor Vechicle Certificate-) of RD$100.00.

Collection of services for RD$300.00.

The duplicate must be requested by the vehicle’s owner, or an authorized representative by means of a legalized power.


Legal Successions and Donations.

What are the requirements for presenting Declaraciones Sucesorales (Legal Successions Statements)?

The interested party will have to go to Dirección General de Impuestos Internos (DGII) (General Directorate of Internal Taxes) with the following documents:

Death Certificate (indispensable).

Copy of the Cédula de Identidad y Electoral (Electoral and Identification Card) of the deceased.

Birth Certificate of the inheritors or heirs (indispensable).

Marriage Certificate (if it applies).

Documents related to the funeral expenses and the pending debts to be paid.

Testament or Will (if it exists).

Financial Certificate and Bank Account Books.

Titles of Property.

Declaración Jurada (Sworn Financial Statement) (form SD-1 and Annexes).


What is the Tax that is due to be paid for Donations?

The Tax to be paid for Donations according to Law 2569 (modified by Laws 288-04 and 557-05) is 25% of the value of the donation.


Are the Donations received by the Not-For-Profit Organizations exempted from the payment of the ISR (Income Tax)?

The Donations obtained by the Not-For-Profit Organizations are exempted of the payment of ISR (Income Tax) whenever such income and the social patrimony are destined to the aims of their creation and in no case they are distributed directly or indirectly among the associates; according to what it is stated on Article 299 of Law 11-92. However when these Organizations generate income originating from activities of a different nature from the intentions for which they were created, these incomes will be subject to this tax.


What percentage can be deducted by the companies out of the Donations that they make?

The companies can deduct themselves up to 5% of the taxable net income of the exercise, after carrying out the compensation of loss originating in previous exercises, when it corresponds when they make donations to Not-For-Profit Organizations properly registered, according to Articles 287 of Law 11-92 and 31 of the Reglamento (Regulation).

What are the requirements for the companies to make donations to Non-Governmental Organizations (NGOs)?


The companies that wish to make donations will have to comply with the following norms:

The donations can be made in money or species, tangible and intangible goods, real estate property and in quantifiable services.

The value of the donations made in non-real-estate property, real estate property or other species, which constitute capital assets, registered in joint accounts of Categories 2 or 3, will have to agree with the value in books whereupon these goods are entered by the taxpayer when making the donations. The donations made in stocks or shares, bonds, certificates and similar ones, will be computed according to their value in book, updated with the premiums, discounts, dividends or interests receivable.

The donor will have to credit, with the respective receipt or document given by the beneficiary organization, the amount and destiny of the donation that has been made.

In order for a donation to be deducted to a donor, the beneficiary organizations will have to be enrolled previously in a special registry that will be kept by the Administration. This registration will have to be renewed every three years, previous verification of the fact that the organization is fulfilling the aims of its creation and the formal duties that correspond to it as stated in the Código Tibutario (Taxes Code).

Not later than March 15th of every year, the referred organizations will have to inform to the Administration of the donations received in the previous year, including the statement of the donors, the donated amounts and goods.

In the case of donations in money, the deduction will only be able to be computed when the respective amount indeed is given to the organization receiving the donations, if the donation is made in cash; or once the checks, letras de cambio (letters of transfer) or other similar documents of payment are received by the beneficiary organization, if the donation takes place by means of titles, values or document of credit.

The donations will have to fulfil, in addition, the effective legal dispositions for the validity of the donations.


What is burdened by this tax?

All transfers of non-real-estate property or real estate property caused by death or donation.


Who must pay?


The testament/will inheritors or heirs, successors and beneficiaries.


Donees.

Who are exempted?

The amount of the transfer is lower than five hundred pesos (RD$500.00).

The homestead instituted by law.

Life insurances of the deceased.

The goods bequeathed by testament to public and charitable institutions, charity or public utility institutions recognized by the State.


When is it due to be presented and to be paid?

Within thirty (30) days after the death, it is required to present documentation, for liquidation of the legal file.


What form is it required to be presented?

The required form is Form SD-01 and Annexes in original format.


Translator’s Disclaimer: This document has been translated for general information purposes. For official information, please, contact the DGII or a qualified lawer.